SOUTH KOREA RALLIES AS TAIWAN ETF EXPLODES TO RECORD HIGH -- EFA AND EEM HIT NEW RECOVERY HIGHS -- BOUNCING COMMODITIES AND A WEAKER DOLLAR ARE BOOSTING CANADA ISHARES -- NYSE INDEX HITS NEW RECORD -- NASDAQ TRADES ABOVE ITS MARCH 2000 CLOSING HIGH
SOUTH KOREA RISES -- TAIWAN ETF HITS NEW HIGH... China and Japan aren't the only Asian countries that are hitting new highs. Two of today's strongest performers are South Korea and Taiwan. Chart 1 shows South Korea iShares (EWY) climbing nearly 2% to the highest level since last September. The day's standout Asian market, however, is Taiwan. Chart 2 shows Taiwan iShares (EWT) jumping nearly 3%, and achieving a major bullish breakout. The EWT is now trading at a record high. According to Barron's, an overnight report of a possible link between Taipei and the Shanghai stock exchange may account for the strong buying. Taipei has already announced a link with Singapore starting in July. A possible link with Tokyo is also being discussed. The EWT is also getting a boost from Taiwan Semiconductor (TSM) which is its biggest stock. Chart 3 shows TSM jumping 2% and climbing above its 50-day moving average. [The jump in TSM is partially offsetting a 7% loss in Texas Instruments within the semiconductor group].
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Chart 1
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Chart 2
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Chart 3
FOREIGN ETFS HIT NEW RECOVERY HIGHS... Foreign developed and emerging market ETFs are hitting new recovery highs. Chart 4 shows Emerging Markets iShares (EEM) reaching a new seven-month high. Two of its biggest gainers are South Korea and Taiwan. Brazil and Russian ETFs are also having a strong day. The gains in those countries are mainly tied to a continuing bounce in commodity prices, and oil in particular. A weaker dollar is helping as well. Chart 5 shows EAFE iShares (EFA) trading at a new nine-month high. The weaker dollar is giving an added boost to foreign stock ETFs that are quoted in dollars. Canada (which is not included in the EAFE) is also getting a boost from rising commodity prices and a stronger Canadian Dollar.
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Chart 4
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Chart 5
CANADA ISHARES TEST 200-DAY AVERAGE... Chart 6 shows Canada iShares (EWC) at a new four month high and trying to clear its 200-day average. Canada is getting help on two fronts. One is the rebound in commodity prices, and oil in particular. The other is weakness in the U.S. dollar and strength in its own currency. Chart 7 shows the Canadian Dollar rising to a three-month high as the price of crude oil (black line) nears a new 2015 high. They bottomed together in mid-March.
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Chart 6
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Chart 7
NASDAQ AND NYSE INDEXES HIT RECORD HIGHS ... It looks like the U.S. stock market is rejoining the global stock rally. Chart 8 shows the NYSE Composite Index trading at a new all-time high. The Nasdaq is doing the same. Chart 9 shows the Nasdaq Composite Index trading above its March high. It's also trading above its March 2000 closing high at 5048, which is a pretty big accomplishment. The SPX is close to a new record as well. Chart 10 shows the S&P 500 rising above its "symmetrical triangle" resistance line. A close above its February high at 2119 (which appears likely) would put it in record territory as well. Nine of ten sectors are up today, with the biggest gains in consumer discretionary and energy stocks. The latter group is benefiting from a $1.46 jump in the price of crude. Most other commodities are also bouncing as the dollar continues to lose ground.
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Chart 8
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Chart 9
